Have you heard about the NY Labor Law and wondered what it means?
If you’re a NY contractor, you are probably paying a lot more for insurance if your policy has what’s commonly known as ‘action over’ coverage. Or you may have been denied a job if you were unable to provide the proper proof of this ‘action over’ coverage.
What is ‘action over’ coverage? And why is it so expensive?
Standard liability insurance policies exclude coverage for injury to employees of the insured. The reason for this is simple. Employees are expected to recover damages from workers compensation coverage and not from their employer’s liability insurance policy.
Injured employees will however often seek compensation from other places too. They may sue the general contractor and/or the property owner of the jobsite.
To protect themselves from such lawsuits, contractors and owners will often (and should) enter into an agreement with the contractors they hire, that the contractor agrees to assume all liability. Essentially this means that when the employee sues a third party (the general contractor or owner) their employer is required to pay for the damages. This action of collecting over or more than workers compensation is what’s referred to as ‘action over’.
Since most claims for contractor policies are from payments to injured employees, this ‘action over’ or ‘contractual liability’ coverage accounts for hefty insurance prices.
But that’s not all.
New York State has some of strictest laws protecting construction workers. The laws place the full liability on the contractor or property owner even if they were not negligent. In most cases involving the NY Labor Laws, large amounts are awarded to the injured party.
Many insurance companies will decline to insure NY contractors for this reason. Some insurance policies exclude coverage for damages because of the NY Labor laws. Other policies will restrict the liability assumed in a contract if it is related to the NY Labor laws. Policies that do provide full action over coverage without a NY Labor law exclusion or restriction will cost accordingly.
Would your insurance policy provide coverage for a third-party action over lawsuit? Are there any restrictions of coverage related to the NY Labor Laws? I would suggest that you have an experienced Agent review your policy. There are many different ways that this coverage is excluded or restricted on a policy.
Want us to review your policy? Just email us a copy and we'll let you know what we find.